Q2 2023 Gaming and Leisure Properties Inc Earnings Call
[music].
Greetings and welcome to the gaming and leisure properties second quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star.
Zero on your telephone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce your host Joe <unk> Investor Relations. Thank you Sir you may begin.
Thank you Maria good morning, everyone and thank you for joining gaming and leisure properties second quarter 2023 earnings call and webcast. The press release distributed yesterday afternoon is available on the Investor Relations section on our website at Www G. L prop Inc. Dot com.
On today's call management's prepared remarks and answers to your questions may contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995.
Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today are.
Forward looking statements may include those related to revenue operating income and financial guidance as well as non-GAAP financial measures such as F. F O N E S L.
As a reminder, forward looking statements represent managements current estimates and the company assumes no obligation to update any forward looking statements in the future.
We encourage listeners to review the more detailed discussions related to risk factors and forward looking statements contained in the company's filings with the SEC, including its 10-Q and in the earnings release as well as the definitions and reconciliations of non-GAAP financial measures contained in the company's earnings release.
On this morning's call. We are joined by Peter Carlino, Chairman and Chief Executive Officer at Gaming Leisure properties and also joining today's call are Brandon Moore, Chief Operating Officer General Counsel and Secretary designate Burke, Chief Financial Officer, and Treasurer, Steve <unk>, Senior Vice President and Chief Development Officer, and Matthew <unk>, Senior Vice President and Chief Investment Officer.
With that it's my pleasure to turn the call over to Peter Carlino. Peter. Please go ahead.
Well, thank you Joe and good morning, everyone.
We have as Joe has highlighted our entire team and you'll probably hear from most of them are <unk> to this call.
Look we've had another nice quarter as well as we continue to build and strengthen our gaming portfolio, which by the way now totals 15, nine properties and I wanted to highlight that at our spin from Penn in 2013.
We spun with 19 properties so.
So we continue to build our portfolio base and.
I can say that while nothing is certain over the next six to 12 months I believe that we can continue.
Continue to build that number.
And also as a large shareholder myself.
With something in the order of 12 million shares in this company.
I am highly focused on building our dividend base.
At the moment at current stock prices overly generous we need to we need to get that number down.
But they continue to build.
Let me talk briefly about a couple of projects that I think you you're well aware of the first of course is baton Rouge that has been ongoing for some time.
I think we've announced that that property will open in in.
At the end of August and we're excited about it the the physical facility is terrific, we've pushed out a budget a little bit up to $78 million.
But all of those related to project enhancements.
And I do think that casino Queen and certainly our team and it really proud of what has occurred there and we're excited about its potential.
The other project of course that you're all well aware of is Tropicana.
And.
With respect to that you know that we have a long term land lease with valleys.
Which is physically and financially unaffected by the nine acres that we and valleys have ceded to the A's.
Obviously bally's is willing to do that because the spectacular new parks should be a terrific job for it for that.
For that site.
You know also that we've announced that we have committed $175 million to infrastructure.
And various construction items at the site, but we believe and hope that as the project evolves that theres a lot more opportunity than that.
We of course will look at what is appropriate for our shareholders at our company but.
Are they excited about the possibility of doing a whole lot more the subject of course to what Bally I would desire that as there's bally's project.
We have to be competitive, but that that being the case, we'd like to participate and even greater level. So there. That's a couple of the big things that are occurring right now and as I say over the next couple of months.
We hope we can deliver a number of new things as well so with that I'm going to ask Deseret to go through some of the financial issues.
Thanks, Peter and good morning, we reported record results for the second quarter of 2023, and our total income from real estate exceeded the second quarter of 22 by over $30 million. This growth was driven by the addition of the Bally's Biloxi and temperature in assets, which drove an increase in cash rental income of $12 1 million.
Tropicana Las Vegas land lease, which increased cash rental income by $2 6 million in recognition of escalators and percentage rent increases on our leases, which added approximately $3 million of cash rent and the combination of higher noncash revenue growth stops investment in lease adjustments and straight line rent adjustments, which drove a collective year over year increase of approximately.
Only $12 3 million.
Our operating expenses increased $28 9 million, primarily due to noncash items such as the increase in the provision for credit loss on our Cornish leases and an increase in the depreciation expense primarily related to recent transactions.
We anticipate an annualized rent reduction and the amended Penn lease percentage rent between five and $6 million beginning in November of this year that were negatively impacted by the casino closures from Covid during the prior five year reset period that doesn't labs.
We also expect full escalation of $4 2 million annualized on this lease.
In addition, our Penn amended Pinnacle and Boyd Master leases have rent resets occurring on may 1st of 24, while it's too early to predict with confidence. We do expect these resets will result in increased percentage rent adjustments because of the resets that occurred effective may 1st of 'twenty to include in periods, where the casinos were.
Due to Covid.
Our current landside development project that Peter spoke about.
We've currently spent just over $56 million to date as Peter mentioned that total project spend will be $78 million and we will begin generating ran at an eight and a quarter cap rate beginning upon opening.
From a balance sheet perspective, our net leverage is just under five times EBITDA.
We raised approximately $14 5 million under our at the market program.
Rent coverage ratios remain strong ranging from $1 96 to $2 76 on our master leases rather at the end of the prior quarter and we have refined our guidance for 2023 <unk> per diluted share and a P O and O P units to a range of $3 66 to $3 68 per diluted share.
Please note that this guidance does not include the impact of future transaction.
With that I'll turn it back to Peter Thanks, Thanks, Dave and Matt would you add your thoughts sure. Thank you Peter and good morning, everyone.
One thing that's become increasingly predictable through each reported quarter of our results is the consistency of our business model.
As our results continue to consistently compound G. O P is cash flows the path towards institutionalization for our assets continues.
Other real estate sectors are facing a number of unique challenges. The stage is set for continued convergence of perception and valuation.
Our business model is also incredibly simple our topline rent payments dropped to the bottom line without the impact of re leasing fees tenant improvements routine capex or other typical landlord costs are common in other segments of the real estate market.
In addition to this consistency and simplicity is our thesis that our commitment to transparency supports institutionalization.
We've respected positive investor feedback regarding our four wall coverage disclosure and transaction yields and appreciate that they are valuable and necessary data points that enable our investors, who we view as long term partners to reach their own informed conclusions about the stability and strength of our business model.
As you know our cycle tested approach to managing the company focuses on the long term to complement the strength of our underlying business model, we have methodically and purposefully positioned our balance sheet to have conservative leverage and.
In addition to managing debt to EBITDA and to the high force. We are also staggered debt maturities with the next at 400 million not due until September of next year and over $1 $7 billion of available liquidity.
We value the strong foundation that our balance sheet provides us both the ballast in an uncertain environment as well as a tool that positions us to play offense whenever and wherever prudent.
As we navigate a monetary interest rate and economic environment that has little precedent, we see clear clearly the potential for opportunity traditional sources of capital are not as abundant and are also proving to be less predictable, which is a natural opening for G. L. P. I.
Over the past quarter dialogue with existing and potential Counterparties has been healthy we are working hard in the effort to translate that dialogue to tangible outcomes.
We remain focused on unearthing opportunities to prudently deploy our shareholders' capital and the effort to increase long term intrinsic value per share. Thanks for joining today's call and to our investors for their vote of confidence.
I'll now turn the call back to Peter.
Thank you Matt.
Maria would you open the Florida questions. Please.
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One moment, please while we poll for question.
Our first question comes from Barry Jonas Trust Securities. Please proceed with that question.
Hey, guys. Good morning wanted to start with Tropicana Theres been some discussion about whether nine acres will be sufficient for a ballpark I know there'll be some shared space, but it would be helpful to get your thoughts here.
Speaking just for me and others have thoughts around the table I was surprised myself that they could do it so efficiently, but I can tell you that a lot of design work is already in place.
That makes it pretty clear they can accomplish that the way the site. The site is prepared to very interested interesting integrated plan some of it's been public but.
Did you want add some comment to that.
The others around the table.
Steve.
No I mean, I think you said it right Peter.
The plan is for nine acres. The nine acre number has always been the number.
<unk> provided by the parties involved and those who are building.
Constructing the baseball stadium, so youre right Barry there there is a significant portion of shared space.
Which is which also includes parking.
So there are there is there is a plan to make sure that a lot of what you would normally see in a purpose built stadium in a standalone land parcel or lot of the ancillary exterior.
Amenities and things will be shared between both the casino and the stadium itself, Yeah, and I might mentioned that.
This design processes on a tear the A's and bally's had been highly focused on keeping this moving and there have been already significant numbers of meetings.
A lot of detail. So this is moving at a very very fast pace.
That's great I appreciate all that color and then just as a follow up maybe more of a modeling question any thoughts on how the deployment schedule for bonds relating to the 10th construction projects will will work out.
It does yeah. Thank you.
To take that question.
Yeah, not really know and lion King and so yeah, we're working with Penn, but they haven't put out their plans yet. So we definitely don't want to jump ahead of them, but well it will be a coordinated effort and I don't believe anything we'll start until next year.
But we'll have to wait and see what they finally determine.
When we did buy a aurora property this quarter to be used for the relocation, but that's as far as we've gotten at this point.
And we do understand.
With some authority that they are well along in the architecture design and planning on these various projects so.
That gives us.
A lot of comfort this is going to move relatively quickly.
Never fast enough, but its moving.
Our next question comes from handle <unk> St Juste with Mizuho. Please proceed with your question.
Hey, good morning, Thanks for taking more of a handle.
Hey, there so first perhaps Peter.
Can you talk a bit about the competitive landscape today and your ability to execute in the current environment and convert some of the dialogues are you guys are having at the tangible opportunities, especially as is the 12.
And then you face a little bit more competition from some newer entrants and from peers, who have a bit better cost of capital. Thanks.
You know I can't say that we see a lot of change if anything I think things may have improved for us in this market.
We have a very active a series of discussions occurring again, obviously, nothing we can really say about that but we're very encouraged that the next couple of years should be pretty positive for us again cautious in how we say that but we feel pretty good.
Any other thoughts around the table.
Yeah, I mean, I'll add and I'll. It's it's been interesting to watch kind of who is who is competitive when people look at solutions for their balance sheets and over the past number of months, we've watched banks get their wings clipped a little bit.
And in a different way around real estate private equity folks are certainly shifted their focus.
Looking more at essentially that that saw some of the bank void and also don't have the same juice they could get from really low price debt to lever things up.
And I would almost take the opportunity to take a step back and think about our differentiators.
We were different by design compared to banks private equity or other public Reits I mean remember we've got around this table more collective gaming experience then arguably anyone else doing this in a lot of that goes back to Peters respected place and position in the industry and the relationships. Our team has got a track record of creativity that second.
Non if you look at the deals that we've put together over time compared to others.
And the nuances I mean, we don't say something has to fit perfectly.
Certain structure, we figure out with a clean slate what makes the most sense for us and the counter party certainly of Dependability. If you look at the.
The importance that a lot of our counterparties place on having someone that's gonna be there not just today, but 234 years out to be able to be a partner over the long run and also as a public company you know, especially in our balance sheet position, we can use our ability to match fund things.
Certainly different tool chest, then the folks in private equity or banks have to be able to fund deals. So if you put it all together, we've got a very natural seat at the table and in.
Sometimes for a first call to be able to be a solution for counterparties.
Thanks, Matt that's helpful very helpful.
And a related follow up I guess.
Got to have a long running and well known relationship with valleys.
Yes, I'm curious, how you're thinking about the possibility today of being a takeout for their Chicago projects and other opportunities like perhaps that the trop and how this would fit with your long term balance sheet philosophy.
Well it'd be project is project a project. We are obviously much more involved right now in Las Vegas than in Illinois, but.
Again, we would look at anything and everything that that bally's would have to offer and it's a deal by deal possibility.
We want to be the go to guys to valleys, we have a great respect for their imagination for that.
Commit.
They are highly motivated to build that company. So.
Yeah, we think positively about it but there's nothing on the horizon at the moment and that also applies in Las Vegas, we get to see kind of how it evolves we want to be part of it if we can but we.
We havent been offered anything yet and done I don't fully understand where where that project is going in on the balance sheet philosophy question and how it ties and we're going to continue to do the same things you've watched us do.
Emphasized pre funding and match funding and depending on the size of the transaction. We certainly have the tools the ATM in our tool chest to us and we'll be thoughtful about long term rates and how we position our debt debt structure to be able to support our business model.
Hey, guys I'll yield the floor. Thank you.
Our next question comes from Chad Beynon with Macaire. Please proceed with your question.
Good morning, Thanks for taking my question.
Peter can you touch on your appetite to expand into Canada, given that we've seen some more transactions up there that market appears to be a stable as you know the United States from a G. G are in kind of a spend per adult standpoint, and some recent capital that's been deployed into that market. Thanks.
Yeah happy to talk about it I mean look we candidates right across literally the border.
Looking at all the time, we just have never been able to find when you look at the.
The tax issues, we've never been able to find.
Project that.
Made sense to us I mean, you know we look at a lot, but we haven't seen it I don't know Brandon do you want to add some thoughts about that.
I don't know that I have that much to add I mean, I think we do look at a lot in Canada, but between the tax leakage and getting them. The repatriating the money back to the United States. So that we can dividend it out and things like that and of course, we can put debt on it there are strategies, we could employ to try to make those transactions more accretive, but I think to date, we haven't seen the transaction in Canada.
Thats offered both a growth profile with it where we can turn that into something more.
And in a way that would be accretive for our shareholders and so I guess in some we've seen them. So far is more risk and less reward and I think we'll continue to look there, but as you probably know each of those provinces is different and how their taxes are structured and how their regulatory systems are structured are a little bit different and so we look at each one uniquely and we look at a lot of them in.
I think if we find the right project, we'll certainly do it but we've been in we've been in Canada. We've been looking at all of those projects. We just haven't found the deal structure and the project Thats right for us.
As an aside when I bought.
Hollywood casinos at 10, we got of course, the the management contracted at Casino Rama, which is a great experience. There was a fight between the U S government and the Canadian government over taxes that was there when we bought the company.
And 16 years later I am not sure it was.
Solid even by then it went on literally for for year in year out year in year out and that was just such a mess that.
Certainly colors, my thinking somewhat to be extra cautious about the inter country relationship.
Great points. Thank you and then as a follow up wanted to ask about rent coverage conversations we've seen a few operators report so far in the second quarter and it looks like revenues are broadly flat or maybe even down on a same store basis, which has put a little bit of pressure on margin. So there's questions around are there are.
Or are we at peak margin.
Place for the operators so as it relates to rent coverage conversations how does this.
Change deals that could be done in the future.
Historically I think when these deals were done there were still some opportunities for your partners to increase margins and now there's less that they could do so.
Should we start to see different types of economics.
Or deals printed in the future given where we are from a margin standpoint. Thank you.
I'm looking around the table to see who's spaces, just dying to answer that question, Matt I think it's you.
Okay.
[laughter] Yeah look this goes back to our underlying underwriting philosophy, we've always structured in a margin of safety and you've heard us talk about on a number of calls the reality that as margins expanded would likely find a set point somewhere shy of the Max So we're not calling the Max of the men, but we're going to continue to get.
Pound for pound more four wall coverage, then we feel necessary to make sure that our cash flows are safe I mean look at the look at the last few prints, we've had and where we settle out usually it adds it to handle it is not a very high one handle and if you look at the stress test I mean look look back at those now the financial crisis and also at <unk>.
During Covid I mean, we've proven to have more than enough in both those situations. So it's thoughtful it's case by case considered where things were pre COVID-19 as well.
To look at kind of a clean picture and we thoughtfully a player judgment.
Thanks, Matt I appreciate it guys.
Thank you.
Our next question comes from Daniel really now with capital One Securities. Please proceed with your question.
Hey, everyone. Thank you for taking my call.
Peter just the first one going back to your comment about the dividend, where you said you're highly focused on a given basin, you're trying to get a yield.
Yield number to come down is that just saying that pricing is under <unk>.
Undervaluing and you think the dividend.
Hi, absolutely, we're giving away too much free money that people aren't appreciated it adequately.
You bet absolutely.
Look I mean that we don't control what the market does but but.
It's it's it's pretty fulsome right now.
Great. Okay that makes sense and then kind of on a similar vein the past question Matt.
Matthew you mentioned kind of the flexibility partnership you all provide to the operator operators and it's worked well with valleys and Cordish recently and Theres a lot of operators out there with good properties that would appreciate the knowledge base and flexibility.
What do you think can happen over the next year or so for them to come to the table and you guys can allow you guys to put your leverage and leverage the strong balance sheet.
Okay.
Yeah, I mean look we're in an environment, where there's a lot of uncertainty.
We've had a lot of great moves that haven't fully found their way to the economy and you've got caps on both sides expecting very dramatically different outcomes, maybe we get goldilocks, maybe we have some delayed stress that is really tied to when people's maturities come due and when they have to do things, but the catalyst for us to.
Have an opening typically is either M&A, some generational wealth shift transfer estate planning.
Where some strategic goal that the counterparty has I mean, we've yet to have someone who wants the top tick price and sell for the sake of selling and the reality is that we've seen some inflection I mean rates are moving and we're in a period of cap rate discovery. So the discussions we've talked about are in real time, helping determine what might be a possibility and opportunity set.
But it's very situation dependent some folks are saying, let's let things season and wait a little bit.
And we're waiting to be a part of all the things that might happen, if and when people pull the trigger.
Yes, I'd say to say, though that we're looking at our balance sheet every day, that's our business looking at equity how it's priced looking at debt. How is pricing looking ahead, we know what we have Fortunately a lot of what we have is sort of spaced over a period of time that is helpful. Particularly in this environment. So we're very.
Very thoughtful about kind of where and what our opportunities are in the marketplace.
Yeah.
Yeah.
Great great. Thank you.
Our next question comes from Smedes Rose with Citi. Please proceed with your question.
Hi, Good morning. Thanks, I just wanted to ask you a little bit more on the on the dividend.
You mentioned that the yield is.
It's very high.
Does it make you think change or a policy for the way you might think about dividend increases going forward. If you kind of view that they are not being depreciated and given that the shares.
It's underperformed year to date selling off today.
Would you look at essentially some sort.
The purchase opportunities.
It looks like it's trading below consensus that maybe at this point.
Okay I'm going to start with your first part of your question. So our dividend is largely driven by taxable income and required distributions to bromine as a real estate investment trust. So we don't really have a luxury of pulling back our dividend as the initial question suggested.
And currently we are not looking to deploy capital in a buyback Lee just mentioned that we hadn't been in the ATM during the quarter and raised $14 million or so.
Yes.
Smedes I mean.
Take a step back we have a pipeline and we see things that are interesting in it we get free cash flow of $200 million a year and the threshold for any new acquisition is giving us a better risk adjusted return than our existing portfolio and at that lines up we do it but we need to have a persistent discount for a period of time.
<unk> and have that money pile up for us to kind of change gears and go into stock repurchase but at the same time.
At some point, it's certainly a consideration at this pieces lineup, but we're very.
We're very.
Happy with the position we have now with regard to what opportunities might come to pass next six to 12 months, but but in the very short term, we're not judging day to day I mean, this is a very long game.
Okay.
Okay. Thank you.
Thank you.
Our next question comes from Greg Mcginniss with Scotiabank. Please proceed with your question.
Hey, good morning.
Peter you mentioned wanting to be the go to guy.
Valleys and how are you considering the underlying credit quality of that company protecting your cash flows and your willingness to continue increasing exposure there.
On their desk trades in the low double digits at times.
Do you have a comment.
Looking around the table I all I can answer that but go ahead I was just going to say I think that we.
From the beginning we have always focused on the four wall coverage of the portfolio of assets that we own and we've been out in that from the first day to today and I think when we look about the bally's assets, we own we think theyre. Good assets, we think thats a good lease and we are excited about the things that they're doing but we always constantly look at the assets we have.
And the portfolio and I think we feel like those are solid assets and so that enables us to be a good partner to valleys and support them in their efforts while at the same time looking at the assets, we own and looking at the quality of the portfolio, we own and I think what you're hearing from us when it comes to Chicago and Las Vegas is we're waiting to see how these projects come out and if there are opportunities for <unk>.
<unk> that are good for our shareholders and bolster this portfolio will be excited to participate in that but a lot of those are wait and see so I think with the bally's assets. We've been careful to acquire those assets that we're confident are good strong assets in the markets that they operate in.
I think that says it I get to pile on with that Brandon.
What we have is terrific and we're very comfortable with that.
What may come in the future it will depend on what the future holds so we anxiously await.
New opportunities.
And we will evaluate them as they appear.
Okay. Thanks, and then I appreciate the commentary regarding potential deals over the next six to 12 months understanding that deals can be lumpy.
But there haven't been any new acquisitions since June one.
Acquisition announcements since June of last year, and besides the trough last investment opportunity with the Penn deal announced in October So is there anything changing in the broader environment.
Maybe some of those catalysts that Matt mentioned more likely or change in your process and targets, providing even more confidence on getting deals done.
But we can't take any credit for the valleys as deal.
To say that.
Even just a few weeks ago, well I think we can since I had made the original introduction.
And as Bally's was highly focused on finding something that would be magnetic at the site and so we were early instrumental and of course, we agreed to part with the nine acres.
But to be fair the bally's is paying for along the way so yeah in that sense. That's a new project that wasn't here a month ago or a little more than that so.
And Theres a lot else cooking so you just.
We've said it as strongly as we can there's a lot of stuff we're working on it is lumpy.
We've kind of as I jokingly said, we've never had a pipeline quote unquote, but we planned plenty of deals we've gone from 19 properties to 59 and that didn't happen by accident. So we expect to build that number.
Specced over the next couple of years, you'll see that and that's really all I can add today, Greg I Wouldnt look past.
The structure of what we did with 10 also when you think about what drove that you've got operator, I mean life goes on and there's kind of a function of time involved here too where folks need to run their businesses and if there is low hanging fruit for redevelopment or some sort of capital expenditures at properties that make them stronger and better that's another channel of growth potential and its another dye.
<unk>, we always have ongoing with our tenant base.
Yes.
Yeah.
We take the long view here, we're trying to build value for sure again as a shareholder.
I don't feel a panic to do anything frankly as I like to say, there's no deal we have to do but we sensibly or working deal by deal by deal and I think youre going to find that a few years down the road, we're going to have a lot bigger portfolio I really do.
And just.
Just a month before we announce cordish, we probably wouldn't have thought we were doing it like sometimes these things are slow slow and they got very quick.
Alright fair enough appreciate it.
Thank you.
Our next question comes from Ronald Camden with Morgan Stanley . Please proceed with your question.
Hey, just two quick ones.
So the first is just on the the commentary on the amended.
Amended master leases.
Talked about you know, it's very early for the 24 hour ones, but we'd expect that to go positive just any more color on that and then it looks like there was also one of the single property leases that has a variable reset next year any color there would be helpful.
Yes.
Yeah, I mean as I said, it's too early to tell those it's two years, there's two year periods and the reset which roundly at year end to end.
I can tell you is what I've said in my opening remarks is that their work COVID-19 periods in the prior reset that reset in 'twenty. Two so we expect them to go up but we got to wait and see how they continue to performance a little bit early to give you a number yet.
As an easy comp.
Well said I like that.
And what about the debt does that include the single property lease I'm looking at Bell Terra Park lease it looks like there's one coming may 2024.
Any comments there, yes same commentary.
Okay got it.
And then the last one was just a notice on the.
Lincoln option was extended from 24 to 26 just maybe.
How did that come about and how are you thinking about sort of the potentials.
Potentials in the conversations going there thanks, Brandon or do you want will give it is Steve then sure yes sure.
The Lincoln option was as you pointed out set to expire December 24, as part of the negotiations around the Tropicana.
Release of the nine acres with valleys. We asked you negotiated two extended to December of 2006.
Which if you look is outside of your revolver maturity date, so that the thinking.
Thinking there was if we.
Get it passed a refinancing event.
The financing event will likely allow them to adjust the language that is currently prohibiting the sale of that asset.
Got it helpful. Thank you.
Thank you.
Our next question comes from Robin Farley with UBS. Please proceed with your question.
Hi, Great. Two questions. One is just kind of circling back to your pipeline and fully understand that it is always lumpy.
Just curious how you would characterize though over the last quarter like between the credit environment and sort of macro views, whether the pace of your discussions.
Has it gotten better or worse like in other words does that make you think that you might have something new sooner or maybe a little delayed just based on kind of those fees over the last quarter.
One other after that.
Sure sure Robyn.
So look I think the pace has definitely picked up.
What I would tell you is the credit market dislocation.
Really really slowed down the M&A environment late late last year in the first.
A quarter or two of this year.
Because as as the operators.
Whether it's the operator looking to sell or the operator looking to buy.
<unk> has more trouble accessing capital through the credit markets.
It really just slows down the pace of everything so I would tell you early part of this year a lot of our discussions were were focused and around.
The unique solutions that might be able to provide folks with access to capital those conversations continue because of the credit market isn't isn't fully rebounded. However, I would tell you that I think on the broader M&A spectrum I do think as the credit market continues to to start too.
Function more normally I do think we will start to see.
Larger larger gaming companies look to divest of certain assets for others looking to acquire them. So I do feel as if discussions on a more broad spectrum as far as various types of transactions has definitely started to pick up over the last quarter.
Okay, great. Thanks, and then Chris.
Question was just on New York, and whether you've kind of how you characterize the early discussions with any of the bidders for New York.
So we've had we have had discussions with a number of folks in New York.
I think.
Our discussions.
I think our discussions have been start and stop much like the process has been and I think as the folks that are looking to bid continue to try to work through that process and await the responses from the state I think those conversations will continue to evolve.
But at this point I'd say, we are we are having conversations and we look forward to.
Trying to be a participant there.
Okay, great. Thank you.
Thank you our next.
Our next question comes from David Katz with Jefferies. Please proceed with your question.
Hi, good morning, everybody.
Hi, Dave.
Hi, Joe.
Tracking.
For quite some time with project and Pompano.
Between quarters.
Caesars.
I'm not asking will you or wont you but.
What I'd love to just talk about as you know.
What aspects of it.
Our potential positives.
Potential gating factors.
How you would look at a project like that and how you might get involved.
Looking around to see who wants to touch that one.
First and foremost I would say that we would love to.
Do a transaction sale leaseback on our casino asset in Pompano and we as.
We have said a number of times with the folks at Caesars.
With respect to the some of the entertainment stuff that corridor. She is doing I would probably look to Matt and his discussions he has with them.
Around those types of topics in various locations.
Yeah, and I I think they're kind of folds in with our overarching strategy not to speak on their behalf around all the things that touch on casinos.
And how that gets funded and if and when there's the right opportunity for us to do something thats win win on both sides.
I haven't gotten there yet, but it's certainly part of the overarching dialogue, yes, suffices to say, we would quite happily do more of it.
On almost any front.
They're just such experienced developers.
You always want to partner with somebody that is as smart as they.
Okay I'll take it thanks very much.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad. Our next question comes from Todd Thomas with Keybanc Capital markets. Please proceed with your question.
Hi, good morning.
Wanted to follow up on the commentary around the percentage rent reset.
A little bit more here and desert I appreciate the detail on the amended Penn Master lease.
Reset in November this year that's helpful.
If we look ahead, so the Penn Pinnacle and Boyd Master leases as you mentioned that the two year measurement periods, so shorter comp periods with a bigger impact.
From the period of closures.
As you said, Matt zero as an easy comps and the combined percentage rent on those two master leases greater than total then the amended Penn Master lease. So do you expect the percentage rent increase and <unk> to be greater than the $5 million to $6 million decrease that you are experiencing on the 23 Penn lease reset that you outlined.
Yeah, as I said I'm not prepared to give you an exact number but if you look back in that two year period for May and June of 2020, there where closures that we didn't we're not going to have in our new reset period.
I am trying to point that we expect as a company for that percentage rent amount to increase not not a decrease like you saw on the Penn transaction. That's all information we're willing to guesstimate at the moment.
Let me add we've labored over that thought for quite a while and all we can do is give you the cautious answer it should be better.
We're pretty optimistic but just.
Just unwilling to try to nail down something we can't guess at today well I think you had 10 10 months left out of the 24 period 24 month period, So it's probably prudent for us to.
Quite a bit of time left before that reset takes right and they haven't even reported to US for June 23. So the last information I have is March right. So.
There's a lot more time remaining that we don't know about.
Well over a year.
Right right, but net.
Net net I guess teams with the combination of the percentage rent amounts on those two master leases the shorter period the impact that the closures would have on the prior period comp it would seem that net the contribution to 'twenty four.
Should it be positive or it could be very close to being positive.
When combined with the $5 million to $6 million decrease that you are experiencing on the patent lease.
Would that would that be reasonable to assume.
Yes that is the exact point that my commentary was trying to get at just don't presume justify intersects down for a period of time because early next year, we have other resets that should offset it.
We've used internally.
As we expect largely offset so thats about as caution the responses. We can cautious response as we can give you.
Understood that's helpful and as the calculation just so we know on those two master leases the same as it was on the amended Penn Master lease.
So the calculation is over a two year period, not a five year period, but yes. The math works the same in the 4% of revenues compared to the base.
Right and it's the percentage rent in the land base rent. That's included in the in the calculation and the amount that will reset and then.
The impact of percentage rent.
That's a it's only a percentage rent that should impact.
Okay land base rate stays the same forever.
Okay alright, thank you.
Our next question comes from Mitch Germain with JMP Securities. Please proceed with your question.
Thank you just curious if all of the approvals.
Come to fruition by the end of the year, how do we how should we consider the timeline for the stadium project.
Brandon.
Yes.
Is really the Ace project, but I think from what we understand they want to begin the 2028 season in that park and when you start working backwards from that they don't have a lot of room for error. So I think once they have their major league baseball approval and were reasonably certain the project is a go then I think youll start to see.
Timeline come out for for demolition of the current site that will permit the physical construction of the stadium to begin so I don't think there is a set timeline on this yet, but I will say when you work backwards from the 2028 opening day.
Theres not a lot of margin for error for the for the Ace team to get this done yeah. We've sat in on the all hands construction meetings and I can tell you is there a weapon this process pretty thoroughly.
Meetings are scheduled well in advance.
The entire design and planning teams are engaged so it's.
Pretty evident that is.
As Brandon as indicated theres, not a lot of time and they make that very clear.
And your portion of the project towards the start middle or and how does that work into the timeline.
I think the answer is yes. So so the part of the project that we've committed to includes demolition, which will be at the beginning obviously and then it includes construction of the podium and some other.
Shared infrastructure that would probably come towards the end quite frankly, and so I think youre going to see the demolition piece upfront and then the rest of it that we have committed so far at the backend.
Thank you.
Okay.
There are no further questions at this time I would now like to turn the floor back over to Peter Carlino for closing comments.
Well. Thank you everyone I hope this has been helpful and we always appreciate the opportunity to to make these presentations. So see you all next quarter. Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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